Analyzing Beijing Enterprises Environment Group Limited’s (SEHK:154) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess 154’s recent performance announced on 31 December 2019 and compare these figures to its long-term trend and industry movements.
Was 154’s recent earnings decline worse than the long-term trend and the industry?
154’s trailing twelve-month earnings (from 31 December 2019) of HK$222m has declined by -16% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 39%, indicating the rate at which 154 is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s going on with margins and whether the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Beijing Enterprises Environment Group has fallen short of achieving a 20% return on equity (ROE), recording 7.1% instead. Furthermore, its return on assets (ROA) of 3.1% is below the HK Commercial Services industry of 6.0%, indicating Beijing Enterprises Environment Group’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Beijing Enterprises Environment Group’s debt level, has increased over the past 3 years from 1.2% to 6.5%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I recommend you continue to research Beijing Enterprises Environment Group to get a better picture of the stock by looking at:
- Financial Health: Are 154’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2019. This may not be consistent with full year annual report figures.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.